Government to offer childcare tax break to parents

LONDON Tue Mar 19, 2013 7:08am GMT

A woman walks a child on to a playground in Loughborough, central England January 29, 2013. REUTERS/Darren Staples

A woman walks a child on to a playground in Loughborough, central England January 29, 2013.

Credit: Reuters/Darren Staples

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LONDON (Reuters) - Prime Minister David Cameron will unveil a new tax break on Tuesday to help working parents with their childcare costs from 2015, the government said, seeking to placate families squeezed by austerity, a stagnant economy and weak wage growth.

The announcement comes a day before Chancellor George Osborne is due to reject calls to abandon the coalition government's deficit reduction programme when he delivers his budget statement to parliament.

Trailing in the polls before an election due in 2015, Cameron and Osborne's Conservatives are accused by the Labour opposition of choking the economic recovery with a focus on austerity rather than growth.

Under pressure to do more to revive the economy and help hard-pressed households, Cameron will visit a nursery school in London on Tuesday to set out details of the tax break. It will be open to 2.5 million families and will be worth up to 1,200 pounds a year per child.

Britain's childcare costs are among the highest in the world, hitting parents already struggling with years of rising household bills and economic uncertainty.

"This is a boost direct to the pockets of hard-working families in what will be one of the biggest measures ever introduced to help parents with childcare costs," Cameron said in a statement.

A finance ministry spokeswoman said around 1 billion pounds had been set aide for the scheme, doubling the existing budget and taking in five times as many parents. The annual breakdown of public funding for the system will be announced later.

The Labour Party, which urged Osborne on Saturday to cut payroll taxes to boost growth, said many families had already lost money in government cuts.

"This announcement will not make up for the up to 1,500 pounds that families on middle and low incomes have lost in cuts to childcare support," Labour education spokesman Stephen Twigg said.

(Editing by Alison Williams)

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